National Student Loan Program Overhaul Means Good Things for Utahns

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Temporarily, the Biden administration has relaxed rules regarding a student loan forgiveness program, which was criticized for its complex requirements. This change could provide debt relief for thousands of teachers, social workers and other public servants across the country and also in Utah.

Wednesday's announcement by the Education Department indicated that it would remove some of its strictest requirements regarding Public Service Loan Forgiveness. This program was created in 2007 to help more college graduates get into public service, but has only helped 5,500 borrowers get their loans forgiven.

The program was created by Congress to reward college students who choose public service. The program promised to erase any remaining federal student loans if they paid 10 years' worth of repayments.

However, more than 90% of applicants were rejected. Many borrowers find that they do not qualify for the program because they are eligible for the wrong type or plan of repayment after a decade of making payments. Many people are stuck in debt that they didn't think would ever be paid.

These borrowers can now get their loans canceled under temporary changes.

Borrowers who have worked in a qualifying job for 10 years or more will be eligible to receive loan relief, regardless of what type of federal loan they have or how their repayment plan. Past loans payments that were not eligible will be counted, which can help some borrowers get closer to the finish line.

According to the department, 22,000 borrowers will be eligible immediately to cancel their loans. Another 27,000 could also be eligible if they have had previous payments certified. The agency stated that more than 550,000 borrowers could be forgiven.

Miguel Cardona, Education Secretary, stated that borrowers who have dedicated a decade to public service should be eligible for Public Service Loan Forgiveness. "The system has not fulfilled that promise to date, but that is changing for many borrowers."

This is a boon especially for Federal Family Education Loan borrowers, who were previously eligible for federally backed loans through banks. The updated rules allow for cancellation of loans in this program that ended in 2010.

The department will also allow military personnel to count active duty time towards the 10 year mark, even if they pause payments.

The department will begin to automatically count military personnel and federal workers' payments towards the required 10 year period. Under current rules, applicants must apply to have their payments certified.

These changes are temporary and the agency will continue to look at permanent improvements via a federal rulemaking process. As part of a process to bring about significant changes in federal student aid programs, including those that benefit the public service benefits, the department began holding hearings this week.

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I live and work in Utah, so my news will focus on this state. I am also very into finance, entrepreneurship, crypto, and small business. I'm an owner of several businesses, from a solar farm to a sports card shop. I write about my experiences running them.

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